You could buy a house for $5,000 back then
Now they're $500,000. Disgusting. Bring back mandatory 20% down payments and stop with the artificially low interest rates!
shareWould that make prices come down?
shareLowering minimum wage.
sharePeople who earn minimum wages arent buying houses, so no. They're renting, or living with family, in this state at least there's no way they're buying.
shareI was more meaning the raise of minimum wage is why people can't get decent raises anymore. And why prices go up on things.
shareDo look into the whole "living wage" movement, will you?
Because in a great many places, nobody can actually live on minimum wage as it is.
Minimum wage is not a living wage! I am so sick of hearing that! And if you are a new employee at a restaurant or a store you are going to be getting very few hours anyway. Frankly I am upset that Politicians here in Illinois where I live have decided to raise minimum wage to $15 an hour by 2025 and I just got a substantial raise which is $5 above minimum wage. In 5 years I'll be lucky if I even still have a job at the Kroger store I work at! Or if I'm still getting 40 hours. Frankly you people on the left don't even think about farmers and how much they will have to pay their farm hands and how much more they'll be paying for fuel for their tractors if minimum wage is $15 an hour. The farmers here will have to raise their prices on their crops to make up the difference in pay they now have to pay their farmhands. A lot of non corporate businesses will go out because they won't be able to afford to pay their new workers $15 an hour and give fair raises to their longtime workers. But I wouldn't expect you or any liberal to understand that because you're incapable of thinking of the consequences of what you demand!
shareGreenGoblinsOck8 dear, all employees need to earn enough to feed, clothe and house themselves. If a business owner can't pay a fair wage to allow that, then they shouldn't be in business!! Committing wage theft and worker exploitation in the pursuit of being a 'success' is both immoral and illegal.
shareMinimum wage is the least you're allowed to legally make! It is not meant to be the end all of be all of how much one can make! Why can't you people on the left understand that!? You and everyone else on the left drive me nuts because it's like you're living in a fantasy world where you think every business can just give every employee 40 hours a week when they can't! People like you and Bernie Sanders will destroy the world as we know it and put us into an economic state worse than the great depression!
shareWhy can't 'you people' understand that an employee can't live on fresh air, and reside in a box on the street? FFS, just how stupid are you? The lowest wage still needs to cover food, shelter, utilities and travel costs in order to allow a person to survive, and perform their work duties. Not accumulate savings or assets, just survive!!
shareIf you actually think that every business can just make all their employees full time you are completely deluded. And raising minimum wage isn't going to change the fact that everyone new at a store or restaurant is going to get part time hours. I don't hate poor people by the way. I try to give as much as I can to Salvation army and other charities. They just decided to raise minimum wage to $15 an hour by 2025 here in Illinois and I firmly believe I will be losing my job at Kroger then. I just got a substantial wage of $13.55 an hour at the beginning of this year and I doubt they'll be giving me $20 an hour in 2025. Even then they'll probably not be giving me fulltime hours then either like they are now. And it's all thanks to people like you who are just going to make millions more poor with your $15 minimum wage.
shareWould that make prices come down?
Yes. share
How so?
shareSupply and demand.
If bank required a 20% down payment, buyers would need to come up (for instance) with $60 thousand in cash up front to buy a $300K home. That would reduce the amount of qualified buyers for homes in that market, and prices would fall.
When interest rates for mortgages were higher, a higher percentage of the mortgage payment would be for interest, not principle. So if a buyer could afford $2500 a month and that's it, the house they could afford would be cheaper to make up for the high interest penalty, and many potential buyers stayed out of the market when the interest rates were so high making mortgages too costly to take on.
This is what caused the housing bubble that caused many Americans to go bankrupt and damage the economy.
Do-gooders thought that everyone should own a home and not have to scrimp and save for it. So they set forth legislation that allowed (and even required) banks to offer little to no down payment or even income verification. With more people now "qualified" for a mortgage, there were now more buyers than property available, so housing prices skyrocketed. Once these "qualified" buyers started missing payments and going into foreclosure, the housing market became flooded with property, and prices plummeted leaving homeowners with far more money owed on the property than the property was worth.
But I'm not an economist, I'm an engineer, so I'm sure there are others who can speak more articulately about these things. But I believe I got the basics right.
That makes sense. Thanks for the explanation.
shareSome of your comment is on target, but that is NOT what caused the housing bubble. The housing bubble was caused by banks making obviously bad loans. Part of that was fraud within the banks, as mortgage officers had incentives to close loans, and part of it was legislation started by Frank and Dodd which forced banks to make more bad loans.
An additional factor was localized inflation of real estate values. Real estate was high demand in parts of California, for example, but when demand dropped, the market could not sustain the inflated property values. Your discussion of supply and demand applies, but you applied it to an invalid context, rather than what really happened.
The housing bubble only negatively affected specific markets. Where I live, it only created a pause in the increase of value for existing homes, rather than causing a decrease in their value.
FYI, the mortgage market has returned to much more strict requirements than those which allowed the avalanche of bad mortgages that created the crisis.